Ebook Macroeconomics (3rd edition): Part 1

(BQ) Part 1 book Macroeconomics has contents: Economics - Foundations and models; trade offs; comparative advantage and the market system; where prices come from - The interaction of demand and supply; economic efficiency; government price setting and taxes,...and other contents.

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Macroeconomics

Macroeconomics Third Edition

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Library of Congress Cataloging-in-Publication Data

For Constance, Raph, and Will

-R Glenn Hubbard For Cindy, MaHhew, Andrew, and Daniel

-Anthony Patrick O'Brien Find more at www.downloadslide.com

Glenn Hubbard, policymaker, professor, and researcher R Glenn Hubbard is the dean and Russell L

Carson Professor of Finance and Economics in the Graduate School of Business at Columbia University and professor of economics in Columbia's Faculty of Arts and Sciences He is also a research associate of the National Bureau of Economic Research and

a director of Automatic Data Processing, Black Rock Closed-End Funds, KKR Financial Corporation, and MetLife He was formerly

a director of Capmark Financial, Duke Realty, Information Services Group, and Ripplewood Holdings He received his Ph.D

in economics from Harvard University in 1983 From 2001 to 2003, he served as chairman

of the White House Council of Economic Advisers and chairman of the OECD Economy Policy Committee, and from 1991 to 1993, he was deputy assistant secretary of the U.S Treasury Department He currently serves as co-chair of the nonpartisan Committee on Capital Markets Regulation Hubbard's fields of specialization are public economics,

financial markets and institutions, corporate finance, macroeconomics, industrial

organization, and public policy He is the author of more than 100 articles in leading

journals, including American Economic Review, Brookings Papers on Economic Activity,

Journal of Finance, Journal of Financial Economics, Journal of Money, Credit, and Banking, Journal of Political Economy, Journal of Public Economics, Quarterly Journal of Economics, RAND Journal of Economics, and Review of Economics and Statistics His research has been supported by grants from the National Science Foundation, the National Bureau of

Economic Research, and numerous private foundations

Tony O'Brien, award-winning professor and researcher Anthony Patrick O'Brien is a professor of economics at Lehigh University He received his Ph.D from the University of California, Berkeley, in 1987 He has taught principles

of economics for more than 15 years, in both large sections and small honors classes He received the Lehigh University Award for Distinguished Teaching He was formerly the director of the Diamond Center for Economic Education and was named a Dana Foundation Faculty Fellow and Lehigh Class of 1961 Professor of Economics He has been a visiting professor at the University of California, Santa Barbara, and the Graduate School of Industrial Administration at

Carnegie Mellon University O'Brien's research has dealt with such issues as the evolution of the U.S automobile industry, sources of U.S economic competitiveness, the development of U.S trade policy, the causes of the Great Depression, and the causes of black-white income differences His research has been published in leading journals, including American

Economic Review, Quarterly Journal of Economics, Journal of Money, Credit, and Banking, Industrial Relations, Journal of Economic History, and Explorations in Economic History His research has been supported by grants from government agencies and private foundations

In addition to teaching and writing, O'Brien also serves on the editorial board of the

Journal ofSocio-Economics

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Preface xx PART 4: Short-Run Fluctuations

Chapter 1 1 : Aggregate Expenditure and Output

Chapter 1 1 Appendix: The Algebra of

Chapter 1 : Economics: Foundations and Models Macroeconomic Equilibrium 380

Chapter 1 Appendix: Using Graphs and Formulas 24 Chapter 1 2: Aggregate Demand and Aggregate

Chapter 1 3: Money, Banks, and the Federal

Chapter 4 Appendix: Quantitative Demand Reserve System 420

and International Economies Chapter 1 5 Appendix: A Closer Look at the

Chapter 5: Firms the Stock Market, and Corporate Chapter 1 6: Inflation, Unemployment, and

Chapter 5 Appendix: Tools to Analyze Firms'

Chapter 6: Comparative Advantage and the

Gains from International Trade 166 Chapter 1 7: Macroeconomics in an Open Economy 574

Chapter 1 8 Appendix: The Gold Standard and

Chapter 8: Unemployment and Inflation 234

Chapter 9: Economic Growth, the Financial System,

Chapter 1 0: Long-Run Economic Growth: Sources

Preface xx Determining Cause and Effect 29

CHAPTER 1: Economics: Foundations Formulas for the Areas of a Rectangle

MICROSOFT VERSUS THE U.S CONGRESS ON WORKER VISAS Summary of Using Formulas 34

Making the Connection: Will Women Have More

Babies if the Government Pays Them To? 5 MANAGERS MAKING CHOICES AT BMW 37 Optimal Decisions Are Made at the Margin 6 Production Possibilities Frontiers

The Economic Problem That Every Society Must Solve Solved Problem 2-1: Drawing a Production

What Goods and Services Will Be Produced? Possibilities Frontier for Rosie's Boston Bakery 40 How Will the Goods and Services Be Produced? Making the Connection: Facing the Trade-offs in

The Role of Assumptions in Economic Models II Comparative Advantage and the Gains from Trade 47 Forming and Testing Hypotheses in Economic Don't Let This Happen to Youl Don't Confuse

Don't Let This Happen to You! Don't Confuse Solved Problem 2-2: Comparative Advantage

Microeconomics and Macroeconomics 14 Making the Connection: A Story of the Market

A Preview of Important Economic Terms IS System in Action: How Do You Make an iPod? 52

An Inside Look at Policy: Do Immigrants Displace The Legal Basis of a Successful Market System 53

or Complement Domestic Workers? 18 Making the Connection: Property Rights in

Key Terms, Summary Review Questions, Problems Cyberspace: YouTube, Facebook, and MySpace 54

An Inside Look: Detroit Challenges Hybrids

58

25

The Interaction of Demand and Supply

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Demand Schedules and Demand Curves 66 Marginal Benefit Equals Marginal Cost

Making the Connection: Red Bull and the Future Price Ceilings: Government Rent Control

The Supply Side of the Market 74 Don't Let This Happen to You! Don't Confuse Supply Schedules and Supply Curves 74 "Scarcity" with a "Shortage" 109

Variables That Shift Market Supply 75 Solved Problem 4-3: What's the Economic

Market Equilibrium: Putting Demand Giving Have a Deadweight Loss? llO

How Markets Eliminate Surpluses and Shortages 78 Winners, Losers, and Inefficiency III

Demand and Supply Both Count 79 Positive and Normative Analysis of Price

The Effect of Demand and Supply Shifts on Equilibrium 8 1 The Effect of Taxes on Economic Efficiency 112

The Effect of Shifts in Supply on Equilibrium 81 Tax Incidence: Who Actually Pays a Tax? 113 Making the Connection: The Falling Price of LCD Solved Problem 4-4: When Do Consumers

The Effect of Shifts in Demand on Equilibrium 83 Making the Connection: Is the Burden of the Social

The Effect of Shifts in Demand and Supply Security Tax Really Shared Equally between

Prices in the Lobster Market? 84 An Inside Look at Policy: Is Rent Control a

A Change in a Good's Price Does Not Cause Key Terms, Summary, Review Questions, Problems

Shifts in a Curve versus Movements along a Curve 87

Conclusion 87 CHAPTER 4 Appendix: Quantitative

An Inside Look: How Does Advertising Help Red

Bull Increase Demand for Its Energy Drink? 88

Key Terms, Summary, Review Questions, Problems Demand and Supply Equations 127 and Applications 90 Calculating Consumer Surplus and Producer Surplus 128

SHOULD THE GOVERNMENT CONTROL APARTMENT RENTS? 97 PART 2: Firms in the Domestic

Consumer Surplus and Producer Surplus 98 and International Economies

Making the Connection: The Consumer CHAPTER 5: Firms the Stock Market

Surplus from Broadband Internet Service 100

The Efficiency of Competitive Markets 102 Who Is Liable? Limited and Unlimited Liability 134

CONTENT S xi

Making the Connection: How Important Are Comparative Advantage in International Trade 171 Small Businesses to the U S Economy? 136 A Brief Review of Comparative Advantage 171 The Structure of Corporations and the Comparative Advantage in International Trade 172

Corporate Structure and Corporate Governance 137 Increasing Consumption through Trade 173 Solved Problem 5-2: Does the Principal-Agent Solved Problem 6-3: The Gains from Trade 174 Problem Apply to the Relationship between Why Don't We See Complete Specialization? 176

Don't Let This Happen to You! When Google Making the Connection: Why Is Dalton, Georgia,

& Fitch's Stock Price in the Financial Pages 142 Government Policies That Restrict

Using Financial Statements to Evaluate a Corporation 143 International Trade 179

Corporate Governance Policy 145 Measuring the Economic Effect of the Sugar Quota 182

Making the Connection: Was the Principal-Agent Gains from Unilateral Elimination of

An Inside Look: The Principal-Agent Problem The Arguments Over 'frade Policies and Globalization 185

CHAPTER 5 Appendix: Tools to Analyze Consequences of Banning Goods Made with Child Labor 187

Using Present Value to Make Investment Decisions 157 Positive versus Normative Analysis (Once Again) Making the Connection: The Obama Administration 189 Solved Problem SA-I: How to Receive Your

Using Present Value to Calculate Bond Prices 160 Conclusion 191

Using Present Value to Calculate Stock Prices 160 An Inside Look at Policy: Caterpillar and Other

A Simple Formula for Calculating Stock Prices 161 Key Terms, Summary, Review Questions, Problems Exporters Oppose "Buy American" Provision 192

Key Terms, Review QuesHons, Problems and Applications 164

A BRIEF HISTORY OF MULTINATIONAL ENTERPRISES 202

Making the Connection: Have Multinational

IS A GOVERNMENT "BUY AMERICAN" POLICY Corporations Reduced Employment and

A GOOD IDEA FOR U.S FIRMS LIKE CATERPILLAR? 1 67 Lowered Wages in the United States? 205

The United States in the International Economy 168 Challenges to U.S Firms in Foreign Markets 206

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PART 3: Macroeconomic Foundations

and Long-Run Growth

CHAPTER 7: GOP: Measuring Total

Production and Income

FORD MOTOR COMPANY FEELS THE EFFECTS

OF THE RECESSION

Gross Domestic Product Measures Total Production

Measuring Total Production: Gross

Domestic Product

Solved Problem 7-1: Calculating GDP

Production, Income, and the Circular-Flow Diagram

Don't Let This Happen to You! Remember What

Economists Mean by Investment

An Equation for GDP and Some Actual Values

Making the Connection: Will U S

Consumers Be Spending Less?

Measuring GDP by the Value-Added Method

Does GDP Measure What We Want It to Measure?

Shortcomings in GDP as a Measure of

Total Production

Making the Connection: Why Do Many

Developing Countries Have Such Large

Underground Economies?

Shortcomings of GDP as a Measure of Well-being

Making the Connection: Did World War II

Bring Prosperity?

Real GDP Versus Nominal GDP

Calculating Real GDP

Solved Problem 7-3: Calculating Real GDP

Comparing Real GDP and Nominal GDP

The GDP Deflator

Other Measures of Total Production and Total Income

Gross National Product (GNP)

National Income

Personal Income

Disposable Personal Income

The Division of Income

CHAPTER 8: Unemployment and Inflation

THE SEArrLE POST·INTELLIGENCER STOPS

THE PRESSES, CAUSING MORE JOB LOSSES

Measuring the Unemployment Rate and the Labor

Force Participation Rate

The Household Survey

Solved Problem 8-1: What Happens if You

Include the Military?

Problems with Measuring the Unemployment Rate

Trends in Labor Force Participation

Unemployment Rates for Demographic Groups

Making the Connection: Why Was Male Unemployment So High During the Recent Recession?

How Long Are People Typically Unemployed?

The Establishment Survey: Another Measure

of Employment Job Creation and Job Destruction over Time 1YPes of Unemployment

Frictional Unemployment and Job Search Structural Unemployment

Cyclical Unemployment

Full Employment

Making the Connection: How Should We Categorize the Unemployment at the Seattle Post-Intelligencer and Other Newspapers?

Explaining Unemployment Government Policies and the Unemployment Rate Labor Unions

Efficiency Wages Making the Connection: Why Does Costco Pay Its Workers So Much More Than Wal-Mart Does?

Measuring Inflation The Consumer Price Index

Is the CPI Accurate?

Don't Let This Happen to You! Don't Miscalculate the Inflation Rate

The Producer Price Index

Using Price Indexes to Adjust for the Effects

of Inflation Solved Problem 8-5: Calculating Real Average Hourly Earnings

Real versus Nominal Interest Rates

Does Inflation Impose Costs on the Economy?

Inflation Affects the Distribution of Income The Problem with Anticipated Inflation The Problem with Unanticipated Inflation Making the Connection: What's So Bad about Falling Prices?

GROWTH AND THE BUSINESS CYCLE AT BOEING

Long-Run Economic Growth Making the Connection: The Connection

between Economic Prosperity and Health Calculating Growth Rates and the Rule of 70 What Determines the Rate of Long-Run Growth? Solved Problem 9-1: The Role of Technological

CONTENT S xiii

Saving, Investment, and the Financial System 279 Economic Growth in the United States since 1950 316

An Overview of the Financial System 280 What Caused the Productivity Slowdown

The Market for Loanable Funds 282 Has the "New Economy" Increased Productivity? 317

Making the Connection: Ebenezer Scrooge: Why Has Productivity Growth Been Faster

Solved Problem 9-2: How Would a Consumption Why Isn't the Whole World Rich? 3 19 Tax Affect Saving, Investment, the Interest Catch-up: Sometimes, but Not Always 319

Making the Connection: Can a Recession Be in New York City Have to Do With Poverty

the Price Level and the Inflation Rate 291 Enhancing Property Rights and the Rule of Law 326

An Inside Look: Airlines Face the Business Cycle Policies that Promote Saving and Investment 327

and Long-Run Growth 296 Is Economic Growth Good or Bad? 328

CHAPTER 10: Long-Run Economic Growth: Key Terms, Summary, Review Questions, Problems and Applications 332

Economic Growth over Time and around the World 304 CHAPTER 1 1: Aggregate Expenditure

Economic Growth from 1,000,000 B.C

Making the Connection: The Benefits of an Earlier Determining the Level of Aggregate Expenditure

The Per-Worker Production Function 309 The Relationship between Consumption

Growth: More Capital or Technological Change? 310 Income, Consumption, and Saving 349

Sustaining Economic Growth 311 Propensity to Consume and the Marginal

Solved Problem 10-2: Using the Economic Making the Connection: Intel Tries to Jump

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Government Purchases

Net Exports

Graphing Macroeconomic Equilibrium

Showing a Recession on the 45'-Line Diagram

The Important Role of Inventories

A Numerical Example of Macroeconomic

Equilibrium

Don't Let This Happen to You! Don't Confuse

Aggregate Expenditure with Consumption

Spending

Solved Problem 11-3: Determining Macroeconomic

Equilibrium

The Multiplier Effect

Making the Connection: The Multiplier in Reverse:

The Great Depression of the 1930s

A Formula for the Multiplier

Summarizing the Multiplier Effect

Solved Problem 11-4: Using the Multiplier Formula

The Paradox of Thrift

The Aggregate Demand Curve

Conclusion

An Inside Look: Falling PC Sales Signal Further

Decline in the Economy

Key Terms, Summary, Review Questions, Problems

and Applications

CHAPTER 1 1 Appendix: The Algebra

of Macroeconomic Equilibrium

Problems and Applications

CHAPTER 12: Aggregate Demand

and Aggregate Supply Analysis

THE FORTUNES OF FEDEX FOLLOW THE BUSINESS CYCLE

Aggregate Demand

Why Is the Aggregate Demand Curve

Downward Sloping?

Shifts of the Aggregate Demand Curve

versus Movements along It

The Variables That Shift the Aggregate

Demand Curve

Making the Connection: Should Germany

Reduce Its Reliance on Exports?

Don't Let This Happen to You! Understand Why

the Aggregate Demand Curve Is Downward

Sloping

Solved Problem 12-1: Movements along the

Aggregate Demand Curve versus Shifts

of the Aggregate Demand Curve

Aggregate Supply

The Long-Run Aggregate Supply Curve

The Short-Run Aggregate Supply Curve

Shifts of the Short-Run Aggregate Supply Curve

versus Movements along It

Variables That Shift the Short-Run Aggregate

Macroeconomic Equilibrium in the Long Run

Making the Connection: Does It Matter

What Causes a Decline in Aggregate Demand? 398 Making the Connection: How Long Does It

Take to Return to Potential GDP? A View

A Dynamic Aggregate Demand and Aggregate

What Is the Usual Cause of Inflation? 403 The Recession of 2007-2009 403 Solved Problem 12-4: Showing the Oil Shock

of 1974-1975 on a Dynamic Aggregate

An Inside Look: Smaller Freight Volumes

Signal Continued Economic Troubles 408 Key Terms, Summary, Review Questions, Problems

CHAPTER 12 Appendix: Macroeconomic

Making the Connection: Karl Marx:

Capitalism's Severest Critic 418

PART 5: Monetary and Fiscal Policy CHAPTER 13: Money, Banks, and the

COCA·COLA DRIES UP AS MONEY FLOODS ZIMBABWE 421

What Is Money, and Why Do We Need It? 422

Making the Connection: The Mackerel Economy in the Federal Prison System 425

How Is Money Measured in the United States Today! 425

Ml: The Narrowest Definition of the Money Supply 426 Makingthe Connection: Do We Still Need the Penny? 427

Don't Let This Happen to You! Don't Confuse

Solved Problem 13-2: The Definitions of Ml

Using T-Accounts to Show How a Bank Can

CONTENT S xv

The Simple Deposit Multiplier 432 Using Monetary Policy to Fight Inflation 470 Don't Let This Happen to You! Don't Confuse Solved Problem 14-4: The Effects of Monetary

Solved Problem 13-3: Showing How Banks A Closer Look at the Fed's Setting of Monetary

The Simple Deposit Multiplier versus the Real-World Should the Fed Target the Money Supply? 473 Deposit Multiplier 436 Why Doesn't the Fed Target Both the Money Supply

The Federal Reserve System 437 and the Interest Rate? 474

How the Federal Reserve Manages the Money Supply 438 Should the Fed Target Inflation? 475 The "Shadow Banking System" and the Financial Making the Connection: How Does the Fed

The Quantity Theory of Money 442 Fed Policies During the 2007-2009 Recession 477

Making the Connection: The German Hyperinflation Making the Connection: The Wonderful World

of the Early 1920s 444 of Leverage 480

Conclusion 445 The Fed and the Treasury Department Respond 481

Key Terms, Summary, Review Questions, Problems Affects the United States and

CHAPTER 14: Monetory Policy 454 Key Terms, Summary, Review Questions, Problems and Applications 486 MONETARY POLICY, TOLL BROTHERS,

What Is Monetary Policy? 456 A BOON FOR Ha.R BLOCK 495

The Money Market and the Fed's Choice of Monetary What Fiscal Policy Is and What It Isn't 496

Monetary Policy and Economic Activity 463 Don't Let This Happen to You! Don't Confuse

and the Price Level 464 and Aggregate Supply Model 503 Making the Connection: Too Low for Zero: The Government Purchases and Tax Multipliers 504 The Fed Tries "Quantitative Easing" 465 The Effect of Changes in Tax Rates 507

Can the Fed Eliminate Recessions? 467 Taking into Account the Effects of

Don't Let This Happen to You! Remember That The Multipliers Work in Both Directions 508

with Monetary Policy, It's the Interest Rates- Fiscal Policy in Action: The Obama Administration

Monetary Policy in the Dyoamic Aggregate Demand Solved Problem 15-4: Fiscal Policy Multipliers 510

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The Limits of Using Fiscal Policy to Stabilize Shifts in the Short-Run Phillips Curve 550

Crowding Out in the Short Run 512 of Unemployment Ever Change? 552

Deficits, Surpluses, and Federal Government Debt 515 The Effect of Rational Expectations

Solved Problem 15-6: The Effect of Economic The Effect of a Supply Shock on the Phillips Curve 556

Tax Simplification 521 in Monetary Policy 560 Making the Connection: Should the United States Has the Fed Lost It's Independence? 563

Conclusion 525 Key Terms, Summary, Review Questians, Problems

Policy to Stimulate the Economy 526

Key Terms, Summary, Review Questions, Problems

CHAPTER 15 Appendix: A Closer Look CHAPTER 17: Macroeconomics

A Formula for the Government Purchases Multiplier 536 The Balance of Payments: Linking the United States

The «Balanced Budget" Multiplier 537 The Current Account 576

The Effects of Changes in Tax Rates on the Multiplier 538 The Financial Account 577

The Multiplier in an Open Economy 539 The Capital Account

Why Is the Balance of Payments Always Zero? 579 CHAPTER 16: Inflation, Unemployment, Don't Let This Happen to You! Don't Confuse

and Federal Reserve Policy 542 the Balance of Trade, the Current Account Balance, and the Balance of Payments 579

WHY DOES SUMMITVILLE TILES CARE ABOUT Solved Problem 17-1: Understanding

The Discovery of the Short-Run '!rade-off The Foreign Exchange Market and Exchange Rates 581

Is the Phillips Curve a Policy Menu? 546 the Exchange Rate? 583

Is the Short-Run Phillips Curve Stable? 546 Making the Connection: What Explains the Fall

The Role of Expectations of Future Inflation 547 Some Exchange Rates Are Not Determined

Don't Let This Happen to You! Don't Confuse

What Happens When a Currency Appreciates

Solved Problem 17-2: The Effect of Changing

Exchange Rates on the Prices of Imports

The Real Exchange Rate 588

The International Sector and National

Saving and Investment 588

Net Exports Equal Net Foreign Investment 589

Domestic Saving, Domestic Investment,

Solved Problem 17-3: Arriving at the Saving

The Effect of a Government Budget

Making the Connection: Why Is the United States

Called the "World's Largest Debtor"? 593

Monetary Policy and Fiscal Policy in an Open Economy 594

An Inside Look at Policy: Financial Crisis

Key Terms, Summary, Review Questions, Problems

Don't Let This Happen to You! Remember

The Current Exchange Rate System 607

Solved Problem 18-2: Calculating Purchasing

Power Parity Exchange Rates Using Big Macs 610

Making the Connection: Can the Euro Survive

Making the Connection: Crisis and Recovery

An Inside Look at Policy: Can Tariffs Offset

Key Terms, Summary, Review Questions, Problems

CHAPTER 18 Appendix: The Gold Standard

The Collapse of the Bretton Woods System 631 Key Terms, Summary, Review Questions, Problems

and the Market System

CHAPTER 3: Where Prices Come

From: The Interaction of Demand

and Supply

CHAPTER 7: GOP: Measuring

Total Production and Income

CHAPTER 8: Unemployment

and Inflation

CHAPTER 9: Economic Growth,

the Financial System, and

Business Cycles

CHAPTER 1 0: long-Run Economic

Growth: Sources and Policies

CHAPTER 1 Appendix: Using Graphs and Formulas

CHAPTER 4 Appendix:

Quantitative Demand and Supply Analysis CHAPTER 5: Firms, the Stock Market, and Corporate Governance

CHAPTER 5 Appendix: Tools to Analyze Firms' Financial Information

CHAPTER 6: Comparative Advantage and the Gains from International Trade

CHAPTER 6 Appendix:

Multinational Firms

CHAPTER 1 1 : Aggregate Expenditure and Output In the Short Run

This chapter uses the Keynesian 45" -line aggregate expenditure model to introduce students to the short­

run relarionship between spending and production

The discussion of monetary and fisCAl policy in later chapters uses only the aggregate demand and aggregate supply model which allows instructors to omit Chapter II

CHAPTER 4: Economic Efficiency, Government Price Setting, and Taxes

This chapter carefully develops the AD-AS

modeJ and then makes the model dynamic to

better account for actual movements in real

GDP and the price leveL The dynamic AD-AS

modeJ is covered in an optional section which

instrudors can omit without loss of continuity

CHAPTER 1 3: Money, Banks, and

the Federal Reserve System

CHAPTER 1 1 Appendix: The Algebra of Macroeconomic Equilibrium

CHAPTER 1 6: Inflation, Unemployment, and Federal Reserve Policy

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When George Lucas was asked why he made Star Wars, he replied, "It's the kind of movie I like to see, but no one seemed to be making them So, I decided to make one." We realized that no one seemed to be writing the kind of textbook we wanted to use in our classes So, after years of supplementing texts with fresh, lively, real-world examples from newspapers, magazines, and professional journals, we decided to write an economics text that delivers complete economics coverage with many real-world business examples Our goal was to keep our classes "widget free."

NEW TO THE THIRD EDITION

Much has happened i n the economy during the last few years The financial meltdown that began in the summer of 2007 led to the most severe recession since the Great Depression

of the 1930s In response to these problems, Congress, the president, and the Federal Reserve enacted dramatic new policies Our approach in the first two editions of this text has been to put applications at the forefront of the discussion We believe that students find the study of economics more interesting and easier to master when they see economic analysis applied to the real-world issues that concern them Given how much has happened recently in the economy, we believe that this new edition will provide students with a better understanding

of recent economic events and the policy responses to them The new material in this edition has taken us into areas-such as investment banking and mortgage-backed securities-not often dealt with in principles texts We believe, though, that a basic background in these issues is necessary for students to understand the economic problems of recent years and the responses of policymakers

Here is a summary of our changes Please see the next section for details on each change: New coverage of the recession and financial crisis of 2007-2009

New coverage of initiatives by the Federal Reserve

New coverage of fiscal policy, including President Obama's stimulus program Reorganized presentation of the dynamic aggregate demand and aggregate supply model in the monetary policy chapter and fiscal policy chapter

All GDP data are now on a 2005 base year basis

All figures, tables, and graphs have been carefully updated

All companies in the chapter openers have been either replaced with new companies or updated with current information

All chapters include new An Inside Look newspaper articles and analyses to help students apply economic thinking to current events and policy debates

There are 24 new Making the Connection features to help students tie economic concepts

to current events and policy issues

We have taken the opportunity of this new edition to make many changes throughout the text, while concentrating on three key areas:

The financial crisis and recession of 2007-2009 The financial crisis and resulting recession were the worst since the Great Depression of the 1930s We discuss the recession throughout the book, including a detailed discussion of its origins in Chapter 12, "Aggregate Demand and Aggregate Supply Analysis." Chapter 12 also includes a discussion of the particular sever­ity of recessions caused by financial crises and contains a new discussion of how long it takes the economy to return to potential GDP The housing bust and subprime crisis are discussed

in Chapter 13, "Money, Banks, and the Federal Reserve System," and Chapter 14, "Monetary

Policy." Chapter 7, "GDP: Measuring Total Production and Income:' has a new Making the

Connedion on the decline in consumption spending and increase in saving during the reces­

sion Chapter 8, "Unemployment and Inflation" has a new Making the Connection on the sur­

prising increase in male unemployment relative to female unemployment during the reces­

sion Chapter 9, "Economic Growth, the Financial System, and Business Cycles," has a new

Making the Connedion on firms that decide to expand even as their sales fall during a reces­

sion Chapter I I , "Aggregate Expenditure and Output in the Short Run," contains a new sec­

tion on the "paradox of thrift." Chapter 18, "The International Financial System," has a new

Making the Connection on the debate over whether the euro helped or hurt Europe in dealing

with the recession

New initiatives by the Federal Reserve During 2008, the Fed dramatically broke with

precedent by setting up a number of new "lending facilities," and by participating in

actions such as the purchase of Bear Stearns by JP Morgan Chase In this new edition, we

provide students with a basic background on investment banks, the process of securitiza­

tion-including a new explanatory figure-and the mortgage-backed securities market­

including the roles of Fannie Mae and Freddie Mac-and the debate among economists

concerning the Fed's new policies Chapter 13 contains an important new section on the

rise of the "shadow banking" system and a new supporting figure to explain securitization

Chapter 15 has a new Making the Connection on the role leverage played in the financial

crisis Chapter 16, "Inflation, Unemployment, and Federal Reserve Policy," covers the debate

over Alan Greenspan's culpability in bringing on the financial crisis, the consequences of the

Fed's intervention to save long-term capital management, and the questions raised by the

Fed's close collaboration with the Treasury during the latest crisis, particularly the question

of whether the Fed's independence has been undermined

Fiscal policy, including President Obama's stimulus program The stimulus package enacted in

early 2009 was the largest fiscal policy action in U S history We examine the package in detail

in Chapter 15, "Fiscal Policy," which also has a figure setting out the components of the pack­

age Chapter 15 has a new Making the Connedion on the debate over the size of the government

spending multiplier In discussing the tax cuts in the stimulus program we include a new sec­

tion on the different effects temporary and permanent tax changes have on consumption

spending

Here are other significant changes to Macroeconomics Third Edition:

Many instructors have found our dynamic aggregate demand and aggregate supply

model to be an important improvement on the usual static model We understand, how­

ever, that some instructors would prefer to concentrate on the basic model So, in the

third edition, our discussion of the dynamic model appears in one entirely self-contained

section in each of Chapters 12, 14, and 15 These sections can be omitted with no loss of

continuity because knowledge of the dynamic model is not presumed in any of the dis­

cussion outside of these sections

Al! GDP data are now on a 2005 base year basis As of publication, ours is the only text

that has 2005 base year data, which was first released by the U S Bureau of Economic

Analysis in late summer 2009

All figures, tables, and graphs have been carefully updated, so they reflect such recent

events as the explosion in the federal budget deficit and the increase in government debt

as a percentage of GDP

All companies in the chapter openers have been either replaced with new companies or

updated with current information

Al! chapters include new An Inside Look newspaper articles and analyses to help students

apply economic thinking to current events and policy debates

P RE F A CE xxi Find more at www.downloadslide.com

Finally, we have gone over rhe text literally line-by-line, tightening the discussion, rewriting unclear points, and making many orher small changes We are grateful to rhe many instructors and students who made suggestions for improvements in rhe previous edition We have done our best to incorporate as many of these suggestions as possible

The Fou ndation :

Contextual Learning and Modern Organization

Students come to study macroeconomics with a strong interest in understanding events and developments in the economy We try to capture that interest and develop students' eco­nomic intuition and understanding in this text We present macroeconomics in a way that is modern and based in rhe real world of business and economic policy And we believe we achieve this presentation without making the analysis more difficult We avoid the recent trend of using simplified versions of intermediate models, which are often more detailed and more complex than what students need to understand the basic macroeconomic issues Instead, we usc a more realistic version of the familiar aggregate demand and aggregate sup­ply model to analyze short-run fluctuations and monetary and fiscal policy We also avoid rhe "dueling schools of rhought" approach often used to teach macroeconomics at rhe prin­ciples level We emphasize rhe many areas of macroeconomics where most economists agree And we present rhroughout real business and policy situations to develop students' intuition Here are a few highlights of our approach to macroeconomics:

A BROAD DISCUSSION OF MACRO STATISTICS Many students pay at least some attention to rhe financial news and know rhat rhe release of statistics by federal agencies can cause movements in stock and bond prices A background in macroeconomic statis­tics helps clarify some of rhe policy issues encountered in later chapters In Chapter 7,

"GDP: Measuring Total Production and Income," and Chapter 8, "Unemployment and Inflation," we provide students with an understanding of the uses and potential short­comings of rhe key macroeconomic statistics, without getting bogged down in the minutiae of how the statistics are constructed So, for instance, we discuss the important differences between rhe payroll survey and rhe household survey for understanding con­ditions in rhe labor market We explain why rhe financial markets react more strongly to news from the payroll survey Chapter 14,"Monetary Policy," discusses why rhe Federal Reserve prefers to measure inflation using rhe personal consumption expenditures price index rather than the consumer price index

EARLY COVERAGE OF LONG· RUN TOP ICS We place key macroeconomic issues in rheir long-run context in Chapter 9, "Economic Growth, the Financial System, and Business Cycles," and Chapter 10, "Long-Run Economic Growth: Sources and Policies:) Chapter 9 puts rhe business cycle in rhe context of underlying long-run growrh and dis­cusses what actually happens during the phases of the business cycle We believe rhis material is important if students are to have the understanding of business cycles rhey will need to interpret economic events, yet rhis material is often discussed only briefly or omitted entirely in orher books We know rhat many instructors prefer to have a short­run orientation to their macro courses, wirh a strong emphasis on policy Accordingly, we have structured Chapter 9 so rhat its discussion of long-run growrh would be sufficient for instructors who want to move quickly to short-run analysis Chapter 10 uses a simple neoclassical growth model to explain important growth issues We apply rhe model to topics such as rhe decline of rhe Soviet economy, rhe surprisingly strong growrh perfor­mance of Botswana, and rhe failure of many developing countries to sustain high growrh

A DYNAMIC MODEL OF AGGREGATE DEMAND

AND AGGREGATE SUP P LY We take a fresh approach

to the standard aggregate demand and aggregate supply

model We realize there is no good, simple alternative to

using the AD-AS model when explaining movements in

the price level and in real GDP But we know that more

instructors are dissatisfied with the AD-AS model than

with any other aspect of the macro principles course

The key problem, of course, is that AD-AS is a static

model that attempts to account for dynamic changes in

real GDP and the price level Our approach retains the

basics of the AD-AS model but makes it more accurate

and useful by making it more dynamic We emphasize

two points: First, changes in the position of the short­

run (upward-sloping) aggregate supply curve depend

mainly on the state of expectations of the inflation rate

Second, the existence of growth in the economy means

that the long-run (vertical) aggregate supply curve shifrs

to the right every year This "dynamic" AD-AS model

provides students with a more accurate understanding

of the causes and consequences of fluctuations in real

GDP and the price level Chapter 12 includes a three­

layer, full-color acetate for the key introductory dynamic

AD-AS graph (Figure 12-8, "A Dynamic Aggregate

Demand and Aggregate Supply Model;' on page 402 and

reproduced on the right).We created this acetate to help

students see how the graph builds step by step and to

help make the graph easier for instructors to present

The acetate will help instructors who want to use

dynamic AD-AS in class but believe the model needs to

be developed carefully

We introduce this model in Chapter 12, "Aggregate

Demand and Aggregate Supply Aoalysis," and use it to

discuss monetary policy in Chapter 14,"Monetary

Policy;' and fiscal policy in Chapter 15, "Fiscal Policy."

Instructors may safely omit the sections on the dynamic

AD-AS model without any loss in continuity to the dis­

cussion of macroeconomic theory and policy

EXTENSIVE COVERAGE OF MONETARY P OLICY

Because of the central role monetary policy plays in the

economy and in students' curiosity about business and

financial news, we devote two chapters-Chapters 14,

"Monetary Policy," and 16, "Inflation, Unemployment,

and Federal Reserve Policy" -to the topic We empha­

size the issues involved in the Fed's choice of monetary

policy targets, and we include coverage of the Taylor

rule The third edition includes coverage of the Fed's

new policies aimed at dealing with the housing crisis

and its effects on financial markets

P RE F A CE xxiii

Figure 12-8 A ornarnc � DernaIcI _ AogNocM "" NodeI

The first acetate overlay adds the shifts in the long·run and short-run

W wiIlIdotbo>i< 4<maod "'l'PiI' Io.rA<oIye<ml< w,iaa io �boo"""' upIIIl_ n �- , 1oa,- w!1 iII Ib<_ yar.rn ws UA.l,.�_ _�IiIon - m iII_MAS, SM.f, The second acetate overlay adds the shift in the aggregate demand curve t

to complete the dynamic model

COVERAGE OF BOTH THE DEMAND-SIDE AND SU P P LY-SIDE EFFECTS OF

FISCAL P OLICY Our discussion of fiscal policy in Chapter 15, "Fiscal Policy;' carefully

distinguishes between automatic stabilizers and discretionary fiscal policy We also pro­

Find more at www.downloadslide.com

A SElF-CONTAINED BUT THOROUGH D ISCUSSION OF THE KEYNESIAN INCOME-EXP ENDITURE AP P ROAC H The Keynesian income-expenditure approach (the "45'-line diagram," or "Keynesian cross") is useful for introducing stu­dents to the short-run relationship between spending and production Many instruc­tors, however, prefer to omit this material Therefore, we use the 45'-line diagram only

in Chapter I I , "Aggregate Expenditure and Output in the Short Run." The discussion of monetary and fiscal policy in later chapters uses only the AD-AS model, making it pos­sible to omit Chapter I I

EXTENSIVE INTERNATIONAL COVERAGE We include three chapters devoted to international topics: Chapter 6, "Comparative Advantage and the Gains from International Trade," Chapter 17, "Macroeconomics in an Open Economy," and Chapter

18, "The International Financial System." Having a good understanding of the interna­tional trading and financial systems is essential to understanding the macroeconomy and

to satisfying students' curiosiry about the economic world around them In addition to the material in our three international chapters, we weave international comparisons into the narratives of several chapters, including our discussion of labor market policies in Chapter 16, "Inflation, Unemployment, and Federal Reserve Policy," and central banking

in Chapter 13,"Money, Banks, and the Federal Reserve System."

FLEXIBLE CHA P TER ORGANIZATION Because we realize that there are a variery of approaches to teaching principles of macroeconomics, we have structured our chapters for maximum flexibility For example, our discussion of long-run economic growth in Chapter 9, "Economic Growth, the Financial System, and Business Cycles;' makes it pos­sible for instructors to omit the more thorough discussion of these issues in Chapter 10,

"Long-Run Economic Growth: Sources and Policies." Our discussion of the Keynesian 45'-line diagram is confined to Chapter I I so that instructors who do not use this approach can proceed directly to aggregate demand and aggregate supply analysis in Chapter 12, "Aggregate Demand and Aggregate Supply Analysis." While we devote two chapters to monetary policy, the first of these-Chapter 14, "Monetary Policy" -is a self­contained discussion, so instructors may safely omit the material in Chapter 16,

"Inflation, Unemployment, and Federal Reserve Policy;' if they choose to Finally, instruc­tors may choose to omit all three of the international chapters (Chapter 6, "Comparative Advantage and the Gains from International Trade," Chapter 17, "Macroeconomics in an Open Economy," and Chapter 18, "The International Financial System"), cover just Chapter 6 on international trade; cover just Chapter 17; or cover Chapter 17 and Chapter

18, while omitting Chapter 6 Please refer to the flexibiliry chart on pages xviii-xix to help select the chapters and order best suited to your classroom needs

Specia l Featu res:

A Rea l-World , H a nds-o n Approach

to Lea r n i n g Econom ics Business Cases a n d A n Inside Look News Articles Each chapter-opening case provides a real-world context for learning, sparks students' inter­est in economics, and helps to unify the chapter The case describes an actual company facing

a real situation The company is integrated in the narrative, graphs, and pedagogical features

of the chapter Many of the chapter openers focus on the role of entrepreneurs in developing new products and bringing them to the market For example, Chapter 3 covers Dietrich

Larry Page and Sergey Brin of Google Here are a few examples of companies we explore in

the chapter openers in this new edition:

Red Bull (Chapter 3, "Where Prices Come From: The Interaction of Demand and

Supply")

Ford Motor Company (Chapter 7, "GOP: Measuring Total Production and Income")

FedEx (Chapter 12, ''Aggregate Demand and Aggregate Supply Analysis")

An Inside Look is a two-page feature that shows students how to apply the concepts from

the chapter to the analysis of a news article Select articles deal with policy issues and are

titled An Inside Look at Policy Articles are from sources such as the Wall Street Journal, The

Economist, and BusinessWeek The An Inside Look feature presents an excerpt from an article,

analysis of the article, a graph(s), and critical-thinking questions

P RE F A CE xxv Find more at www.downloadslide.com

Here are some examples of the articles featured in An Inside Look:

"Marketers Get to Us in More Ways; Pitches Harder to Spot, Writer Says," USA Today (Chapter 3, "Where Prices Come From: The Interaction of Demand and Supply") ''A Slowing Descent: Auto Sales Fell 37 Percent, but Improved Slightly," Washington Post

(Chapter 7, "GOP: Measuring Total Production and Income")

" Slump Persists for Freight Haulers," USA Today (Chapter 12, ''Aggregate Demand and Aggregate Supply")

Economics in Your Life

After the chapter-opening real-world business case, we have added a personal dimension

to the chapter opener with a feature titled Economics in Your Life, which asks students to consider how economics affects their own lives The feature piques the interest of students and emphasizes the connection between the material they are learning and their own experiences

At the end of the chapter, we use the chapter concepts to answer the questions asked at the beginning of the chapter

ContfnlMd from page 61 Economics in YOUR Life!

Will You Drink Red Bull or Monster?

At the beginning of the chapter, we asked you to consider two questions: Would you choose to buy a can of Monster Energy if it had a lower price than a can of Red 8ull7 and Would you be less likely to drink Monster Energy if your income had declined? To determine the answer to the first question, you have to recognize that Red 8ull and Monster Energy are substitutes If you consider the two drinks to

be very dose substitutes, then you are likely to buy the one with the lower price In the market, if con ­ sumers generally believe that Red Bull and Monster Energy are dose substitutes, a fall in the price of Monster Energy will increase the quantity of Monster Energy demanded and decrease the demand for Red Bull Suppose that you are rurrently buying Red Bull, despite its higher price, because you prefer its taste If you switch to Monster Energy when your income declines-perhaps because you have lost your job during a recession-then Monster Energy is an inferior good for you

The following are examples of the topics we cover in the Economics in Your Life

feature:

Will you buy a Red Bull or a Monster? (Chapter 3, "Where Prices Come From: The

Interaction of Demand and Supply")

What's the best country to work in? (Chapter 7, "GOP: Measuring Total Production and

Income")

Do corporate managers act in the best interests of shareholders? (Chapter 12, "Aggregate

Demand and Aggregate Supply Analysis")

Solved Problems

As we all know, many students have great difficulty handling applied economics problems

We help students overcome this hurdle by including two or three worked-out problems tied

to select chapter-opening learning objectives Our goals are to keep students focused on the

main ideas of each chapter and to give students a model of how to solve an economic prob­

lem by breaking it down step by step Additional exercises in the end-of-chapter Problems

and Applications section are tied to every Solved Problem

Additional Solved Problems appear in the following areas:

The Instructor's Manual

PowerPoint® slides

The print Study Guide

In addition, the Test Item Files include problems tied to the Solved Problems in the main

P RE F A CE xxvii Find more at www.downloadslide.com

Don'I Lei This Happen 10 YOU !

Remembef A Change In 0 Good's Ptice

Does NorCouse the Demond Of Supply

CUrWl i o Sh l tt

,up "w , 11 1 I� J" .a n.o"J ''''' '"rply

p.� i1"�""· I",,, n ,,., _ iIt "" I"' � �".t«>

WOIIld."":I Ih "'.rko l "" wIt� olt><r �"t.bl<' btl.,

' '' � J ,I M"''I "" ,' ItfI _ "J ,04,

10 ill f,,6,w,; ·Il«,u"" !'Pk'>.nd or."�" "'>"t ", ",,

1"' in'htp""' ot""." wllI"" i." i Mi '"

:�:;:�.::�InItl����';J:';::td!� 'C::��

,pIo> "' uJu'" hlF,ht r � k>r "'� I' ' wnt,, wlII

�,"',��k , I -.bI ••• nd ' ,�", f

tht kit tfml D, II> r>�r l tUo � iA final <qllilib<iu",r<U

�f I',.' I I<> ),\,," >/!"' ''' "'� ";'h 'h " ' """'r>i'l

y"" ohoookl d""J",,; It.: dnu h.o "', ,iy u k.,·

1tOr>d",", , onc� L" ""' rri< oIor , wiI <aW< rlw

ok , "" "'W � H �' roI<-"' , "O , rlw, lII IM lh M

Tho Inc I ""' 1'f1 •• "."'on cu.u IIw lo"' • ,o! <

;�=:;'.7'��":,�;';.'�'�:=�� Don't Let This Ha ppen to You ! oqu.ol Q, (}, HuI, h"' _ ' u .-tt

I' n ' ·"' "' ' un , t bo · �.'." i ,''' 'n l hio ' '

,Jw """ • ; U , i , P� 1t>c <l"."''<7 ,,_<W >n<I

1!>< ' t " �r "" �""·, ho , , I r "' {},_ I'.o,' ,II.i"

iD<n_ in rn-< "' � in lh< q_"""

r""" q,lO Q tu <lnto ""' ", <I« i _ t

'fOU TVlN: IooI VO.JI"'-"� "'

",-4 1 1 """ ' T' m r><VO"' � _ _ � "''''''''''

We know from many years of teaching which concepts students find most difficult Each chapter contains a box feature called Don't Let This Happen to You! that alerts students to the most common pitfalls

in that chapter's material We follow up with a related question in the end-of-chapter Problems and Applications section

_

-Making the Connection

Each chapter includes two to four Making the Connedion features that present real-world reinforcement of key concepts and help students learn how to interpret what they read on the Web and in newspapers Most Making the Connection features use relevant, stimulating, and provocative news stories focused on businesses and policy issues One-third of the

Making the Connection features are new to this edition, and most others have been updated Several Making the Connection features discuss health care, which remains a pressing policy issue Each Making the Connedion has at least one supporting end-of-chapter problem to allow students to test their understanding of the topic discussed Here are some of the new

Making the Connection features:

Chapter 2: "Facing the Trade-offs in Health Care Spending"

Chapter 3: "The Aging of the Baby Boom Generation"

Chapter 8: "Why Was Male Unemployment So High During the Recent Recession?" Chapter 9: "Can a Recession Be a Good Time for a Business to Expand?"

Chapter 11: "Do Changes in Housing Wealth Affect Consumption Spending?" Chapter 14: "Too Low for Zero: The Fed Tries 'Quantitative Easing'"

FIgu,e 3·3

cnan� In IiluantJV OemondeCI

i">'.of "dhnh f •• f�"" IJ • Cjl,l _ t ., "' - f_ r-c A

6O .-� lIf _ _ •

, ,.t'

Gra phs and Summary Tables

Graphs are an indispensable part of the principles of eco­nomics course but are a major stumbling block for many students Every chapter except Chapter 1 includes end-of­chapter problems that require students to draw, read, and interpret graphs Interactive graphing exercises appear on the book's supporting Web site We use four devices to help students read and interpret graphs:

Review Questions and Problems and Applications­

Grouped by Learning Objective to Improve Assessment

All the end-of-chapter material-Summary, Review Questions, and Problems and

Applications -is grouped under learning objectives The goals of this organization are to make

it easier for instructors to assign problems based on learning objectives, both in the book and in

MyEconLab, and to help students efficiently review material that they find difficult If students

have difficulty with a particular learning objective, an instructor can easily identify which end­

of-chapter questions and problems support that objective and assign them as homework or

discuss them in class Every exercise in a chapter's Problems and Applications section is available

in MyEconLab Using MyEconLab, students can complete these and many other exercises

online, get tutorial help, and receive instant feedback and assistance on exercises they answer

incorrectly Also, student learning will be enhanced by having the summary material and prob­

lems grouped together by learning objective, which will allow students to focus on the parts of

the chapter they found most challenging Each major section of the chapter, paired with a

learning objective, has at least two review questions and three problems

As in the first and second editions, we include one or more end-of-chapter problems

that test students' understanding of the content presented in the Solved Problem, Making the

Connedion, and Don't Let This Happen to You! special features in the chapter Instructors can

cover a feature in class and assign the corresponding problem for homework The Test Item

Files also include test questions that pertain to these special features

I nteg rated Supplements

The authors and Pearson Education/Prentice Hall have worked together to integrate the text,

print, and media resources to make teaching and learning easier

MyEconLab is a unique online course management, testing, and tutorial resource

For the Instructor

Instructors can choose how much or how little time to spend setting up and using

MyEconLab Here is a snapshot of what instructors are saying about MyEconLab:

"MyEconLab offers [students] a way to practice every week They receive immedi­

ate feedback and a feeling of personal attention As a result, my teaching has

become more targeted and efficient." -Kelly Blanchard, Purdue University

" Students tell me that offering them MyEconLab is almost like offering them indi­

vidual tutors." -Jefferson Edwards, Cypress Fairbanks College

"MyEconLab's e-text is great-particularly in that it helps offset the skyrocketing

cost of textbooks Naturally, students love that." -Doug Gehrke, Moraine Valley

Community College

Each chapter contains two preloaded homework exercise sets that can be used to build

an individualized study plan for each student These study plan exercises contain tutorial

resources, including instant feedback, links to the appropriate learning objective in the

eText, pop-up definitions from the text, learning objective summaries, and step-by-step

guided solutions, where appropriate Student use of these materials requires no initial

instructor setup The online gradebook records each student's performance and time spent

P RE F A CE xxix Find more at www.downloadslide.com

Alternatively, instructors can fully customize MyEconLab to match their course exactly, including reading assignments, homework assignments, video assignments, current news assignments, and quizzes and tests Assignable resources include:

Preloaded homework exercise sets for each chapter that include the student tutorial resources mentioned above

Preloaded quizzes for each chapter that are unique to the text and not repeated in the study plan or homework exercise sets

Study plan problems that are similar to the end-of-chapter problems and numbered exactly like the book to make assigning homework easier

Economics in the News articles that are updated weekly with appropriate exercises ABC News clips, which explore current economic applications and policy issues, along with exercises

Test Item File questions that allow you to assign quizzes or homework that will look just like your exams

Econ Exercise Builder, which allows you to build your own customized exercises

Exercises include multiple-choice, graph drawing, and free-response items, many of which are generated algorithmically so that each time a student works them, a different vari­ation is presented

MyEconLab grades every problem, even problems with graphs When working home­work exercises, students receive immediate feedback, with links to additional learning tools

Customization and Communication

MyEconLab in CourseCompass provides additional optional customization and communi­cation tools Instructors who teach distance-learning courses or very large lecture sections find the CourseCompass format useful because they can upload course documents and assignments, customize the order of chapters, and use communication features such as Digital Dropbox and Discussion Board

For the Student MyEconLab puts students in control of their learning through a collection of testing, prac­tice, and study tools tied to the online, interactive version of the textbook and other media resources Here is a snapshot of what students are saying about MyEconLab:

"It was very useful because it had EVE RYTHING, from practice exams to exercises

"I would recommend taking the quizzes on MyEconLab because it gives you a

true account of whether or not you understand the material." -student, Montana

Tech

"It made me look through the book to find answers, so I did more reading."­

student, Northern Illinois University

Martet for Corn

Students can study on their own, or they can complete assignments created by their

instructor Within MyEconLab's structured environment, students practice what they

learn, test their understanding, and pursue a personalized study plan generated from

their performance on sample tests and from quizzes created by their instructors In

Homework or Study Plan mode, students have access to a wealth of tutorial features,

including:

Instant feedback on exercises that helps students understand and apply the concepts

Links to the eText to promote reading of the text just when the student needs to revisit a

concept or explanation

Step-by-step guided solutions that force students to break down a problem in much the

same way an instructor would do during office hours

Pop-up summaries of the appropriate learning objective to remind students of key ideas

while studying

Pop-up key term definitions from the eText to help students master the vocabulary of

economics

Links to the important features of the eText, such as Solved Problems, Making the

Connedion, An Inside Look, and Don't Let This Happen to You!

A graphing tool that is integrated into the various exercises to enable students to build

and manipulate graphs so that students better understand how concepts, numbers, and

P RE F A CE xxxi Find more at www.downloadslide.com

Additional MyEconLab Tools

MyEconLab includes the following additional features:

eText-In addition to the portions of eText available as pop-ups or links, a fully search­able eText is available for students who wish to read and study in a fully electronic environment

Print upgrade-For students who wish to complete assignments in MyEconLab but read in print, Pearson offers registered MyEconLab users a loose-leaf version of the print text at a significant discount

Glossary flashcards-Every key term is available as a flashcard, allowing students to quiz themselves on vocabulary from one or more chapters at a time

Research Navigator (CourseCompass version only)- Research Navigator provides extensive help on the research process and four exclusive databases of credible and reli­able source material, including The New York Times, the Financial Times, and peer­reviewed journals

MyEconLab content has been created through the efforts of Chris Annala, State University of New York-Geneseo; Charles Baum, Middle Tennessee State University; Sarah Ghosh, University of Scranton; Woo lung, University of Colorado; Katherine McCann, University of Delaware; Chris Kauffman, University of Tennessee-Knoxville; Russell Kellogg, University of Colorado-Denver; Noel Lotz, Middle Tennessee State University; Christine Polek, University of Massachusetts-Boston; Douglas A Ruby, Pearson Education; Leonie L Stone, State University of New York-Geneseo; and Bert G Wheeler, Cedarville University

Other Resources for the Instructor

Instructor's Manual

Edward Scahill of the University of Scranton prepared the Instructor's Manual The Instructor's Manual includes chaptcr-by-chapter summaries, learning objectives, extended examples and class exercises, teaching outlines incorporating key terms and definitions, teaching tips, topics for class discussion, new Solved Problems, new Making the Connections, new Economics in Your Life scenarios, and solutions to all review questions and problems in the book The Instructor's Manual is available in print and for download from the Instructor's Resource Center (www.pearsonhighered.comlhubbard) The authors and

Randy Methenitis of Richland College prepared the solutions to the end-of-chapter review

questions and problems

Two Test Item Files

Randy Methenitis of Richland College prepared two Test Item Files Each Test Item File

includes 2,000 multiple-choice, true/false, short-answer, and graphing questions There

arc questions to support each key feature in the book The Test Item Files are available in

print and for download from the Instructor's Resource Center (www.pearsonhighered

Difficulty: I for straight recall, 2 for some analysis, 3 for complex analysis

Type: multiple-choice, true/false, short-answer, essay

Topic: the term or concept the question supports

Learning objective

AACSB (see description that follows)

Page number

Special feature in the main book: chapter-opening business example, Economics in

Your Life, Solved Problem, Making the Connection, Don't Let this Happen to You! and

An Inside Look

The Test Item Files were checked for accuracy by Marc Fusaro of Arkansas Tech

University and Brian Rosario of the University of California, Davis

The Association to Advance Collegiate Schools

of Business (AACSB)

The Test Item File authors have connected select questions to the general knowledge and skill

guidelines found in the AAC SB Assurance of Learning Standards

What is the AACSB?

AAC SB is a not-for-profit corporation of educational institutions, corporations, and other

organizations devoted to the promotion and improvement of higher education in business

administration and accounting A collegiate institution offering degrees in business admin­

istration or accounting may volunteer for AAC SB accreditation review The AAC SB makes

initial accreditation decisions and conducts periodic reviews to promote continuous quality

improvement in management education Pearson Education is a proud member of the

AAC SB and is pleased to provide advice to help you apply AAC SB Assurance of Learning

Standards

What are AACSB Assurance of Learning Standards?

One of the criteria for AAC SB accreditation is the quality of curricula Although no specific

courses are required, the AAC SB expects a curriculum to include learning experiences in the

following categories of Assurance of Learning Standards:

Communication

Ethical Reasoning

Analytic Skills

Use of Information Technology

Multicultural and Diversity

Reflective Thinking

Questions that test skills relevant to these standards are tagged with the appropriate

standard For example, a question testing the moral questions associated with externalities

P RE F A CE xxxiii

Find more at www.downloadslide.com

How Can Instructors Use the AACSB Tags?

Tagged questions help you measure whether students are grasping the course content that aligns with the AAC SB guidelines noted above This in turn may suggest enrichment activi­ties or other educational experiences to help students achieve these skills

TestGen

The computerized TestGen package allows instructors to customize, save, and generate class­room tests The test program permits instructors to edit, add, or delete questions from the Test Item Files; edit existing graphics and create new graphics; analyze test results; and orga­nize a database of tests and student results This software allows for extensive flexibility and ease of use It provides many options for organizing and displaying tests, along with search and sort features The software and the Test Item Files can be downloaded from the Instructor's Resource Center (www.pearsonhighered.comlhubbard)

PowerPoinl" Lecture Presentation

Three sets of PowerPoint® slides, prepared by Fernando Quijano and Yvonn Quijano, are available:

1 A comprehensive set of PowerPoint® slides can be used by instructors for class presenta­tions or by students for lecture preview or review These slides include all the graphs, tables, and equations in the textbook Two versions are available-step-by·step mode, in which you can build graphs as you would on a blackboard, and automated mode, in which you use a single click per slide

2 A comprehensive set of PowerPoint® slides have Classroom Response Systems (C R S) questions built in so that instructors can incorporate C R S "dickers" into their classroom lectures For more information on Pearson Education's partnership with C R S, see the description below Instructors can download these PowcrPoint presentations from the Instructor's Resource Center (www.pearsonhigherecl.comlhubbard)

3 A student version of the PowerPoint® slides i s available at www.pearsonhighered.coml hubbard This version allows students to print the slides and bring them to class for note taking Instructors can download these PowerPoint® presentations from the Instructor's Resource Center (www.pearsonhigherecl.comlhubbard)

Instructor's Resource CD-ROM

The Instructor's Resource CD-ROM contains all the faculty and student resources that sup­port this text Instructors can access and edit the Instructor's Manua� Test Item Files, and PowerPoint® presentations By simply clicking a chapter or searching for a key word, faculty can access an interactive library of resources They can then pick and choose from the vari­ous supplements and export them to their hard drives

Classroom Response Systems

Classroom Response Systems (C R S) is an exciting new wireless polling technology that increases the interactivity of large and small classrooms by enabling instructors to pose ques­tions to their students, record results, and display the results instantly Students can answer questions easily, using compact remote-control transmitters Pearson Education has part­nerships with leading C R S providers and can show you everything you need to know about setting up and using C R S Pearson Education will provide the classroom hardware, text­specific PowerPoint slides, software, and support, and will also show you how your students can benefit! Learn more at www.pearsonhighered.comlcrs

Blackboard and WebCT Course Content

Pearson Education offers fully customizable course content for the Blackboard and WebCT

Other Resources for the Student

In addition to MyEconLab Pearson provides tbe following resources

Study Guide

Jim Lee of Texas A&M University prepared tbe study guide which reinforces tbe textbook

and provides students witb the following:

Chapter summary

Discussion of each learning objective

Scction-by-section review of the concepts presented

Study hints

Additional Solved Problems to supplement tbose in the text

Key terms witb definitions

A self-test including 40 multiple-choice questions plus a number of short-answer and

true/false questions, with accompanying answers and explanations

PowerPoinl" Slides

For student use as a study aid or note-taking guide PowerPoint® slides prepared by

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Figures in step-by-step automated mode using a single click per graph curve

End-of-chapter key terms witb hyperlinks to relevant slides

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P RE F A CE xxxv Find more at www.downloadslide.com

Consu lta nt Boa rd , Accu racy Review

Boa rd , a n d Reviewe rs

The guidance and recommendations o f the following instructors helped u s develop the revi­

sion plans for the third edition and the supplements package While we could not incorpo­

rate every suggestion from every consultant board member, reviewer, or accuracy checker, we

do thank each and every one of you and acknowledge that your feedback was indispensable

in developing this text We greatly appreciate your assistance in making this the best text it

could be; you have helped teach a whole new generation of students about the exciting world

of economics

Consultant Board

Kelly Blanchard, Purdue University

Robert Godby, University of Wyoming

William Goffe, State University of New York-Oswego

David Mitch, University of Maryland-Baltimore County

Edward Scahill, University of Scranton

Robert Whaples, Wake Forest University

Accuracy Review Board

Our accuracy checkers did a particularly painstaking and thor­

ough job of helping us proof the graphs, equations, and fea­

tures of the text and the supplements We are grateful for their

time and commitment:

Fatma Abdel-Raouf, Goldey-Beacom College

Anne Alexander, University of Wyoming

Kelly Blanchard, Purdue University

Charles Callahan III, State University of New

York-Brockport

Marc Fusaro, Arkansas Tech University

Robert Godby, University of Wyoming

William Goffe, State University of New York-Oswego

Tony Lima, California State University-East Bay

Randy Methenitis, Richland College

David Mitch, University of Maryland-Baltimore County

James Moreno, Blinn College

Edward Scahill, University of Scranton

Ed Steinberg, New York University

Arlena Sullivan, Jones County Junior College

Robert Whaples, Wake Forest University

Reviewers

The guidance and thoughtful recommendations of many

instructors helped us develop and implement a revision plan

that expanded the book's content, improved the figures, and

strengthened assessment features We extend special thanks to

Edward Scahill of the University of Scranton and Marc Fusaro

openers and An Inside Look features, and to Randy Methenitis

of Richland College for helping us revise and update the end­of-chapter problems In the macroeconomics volume, Bill Goffe of State University of New York-Oswego helped us update the macro data, based on the new base year of 2005 We are grateful for the comments and many helpful suggestions received from the following reviewers:

CALIFORNIA Ercument Aksoy, Los Angeles Valley College

Kate Antonovics, University of California-San Diego Asatar Bair, City College of San Francisco Diana Bajrami, College of Alameda Anoshua Chaudhuri, San Francisco State University Craig Gallet, California State University-Sacramento Julie Gonzalez, University of California-Santa Cruz Lisa Grobar, California State University-Long Beach Jessica Howell, California State University-Sacramento John !feher, Santa Clara University

Leland Kempe, California State University-Fresno David Lang, California State University-Sacramento Tony Lima, California State University-East Bay

Solina Lindahl, California Polytechnic State San Luis Obispo

University-Roger Mack, DeAnza College

Michael Marlow, California Polytechnic State University Nivedita Mulcherji, Oakland University

Andrew Narwold, University of San Diego Hanna Paulson, West Los Angeles College Mary Pranzo, California State University-Fresno Sasha Radisich, Glendale Community College Jonathan Silberman, Oakland University Martha Stuffier, Irvine Valley College

Steven Yamarik, California State University-Long Hach

GuyYamuhiro, CaLifornia Stat� University-Long �ach

COLORADO

Mohanun�d AkattIIl, Mnropolitan State College ofDmver

Karen Grbhardt, Colorado State University

Nancy JianakoplOll, Colorado State University

CONNEC1t<=

Mark Gill.!, Quinnipiac University

Robert Mart.!, Univ." ity of Connecticut

QlTistian Zimmermann, Univer&ity of Connecticut

Hmnan Baine, Broward College

Thomas McCaleb, Florida State University

Nora Underwood, Uniwrsity of Central Florida

GEORGIA

Donna Fish."., Georgia South,,", University

Shelby Frost, GeorgiaState University

John King Georgia Southern University

Michael Rebulak, G.:orgia Southern Univenity

Hill Yang, Georgia Southern University

IDAHO

Cynthia Hill, Idaho State University

tUlNorS

Rosa Lea Danielson, College of DuPage

Kevin Dunagan, Oakton Connnunity College

Dennis Shannon, Southwestern Illinois College

INDIANA

Kelly Blanchard, Purdue University

John Pomery, Purdue University

Rob Rude, Ivy T� Connnunity CoIlege

mWA

Jennifer Fuhrman, University of iowa

Ken McCormkk, University of Nonhern iowa

Andy Schuchart, Iowa Centra.! Community CoIltg�

lohnSoklw, University of lowa

KANSAS

Amanda Freeman, Kansas State University

KENTIlCKY

Bob Gillette, University of Kmtucky

Gail Hoyt, Univ=ity of Kentucky

LOUISIANA

Lara Gardner, SouthOLrt""' Louisiana Univmiity

Jay Johnson, SouthOLrtern Louisiana Univenity

Sung No, Southern University and A&M CoIlege

Nancy RumOR, Univer.rityof Louisiana n Lafayette

Marsha Goldfarb, Univer.rity of Maryland-Baltimore City Henry Terrell, University of Maryiand-CoU�g� Park

""""CH<1'ElTS G.:ra.!d Friedman, Unive ity of Massachu.etI:ll Jay Zagorsky, Boston University

MIOIIGAN

Jared Boyd, Henry Ford Connnunity College Stev.n HlIywonh, Eutero Michigan University Jame Luke, Lansing CommunityCollege

MINNESOTA Philip Grossman, Saint Goud State University Matth Hyle, Winona State Univer.rity Artatrana RatM, Saint Gaud Stat� University Katherine Schmeiser, University of MinneMlU MISSISSIPPI

Randall Campbell, MiSlli'lsippi State University

&ckyCampbcll Smith, MiMwippi State University Arlena Sullivan, lones County Junior College

MISSOURI

Chris Azevedo, University of Central Missouri K=nit Clay; Ozarks Technical Community College Mark Karscig, University of Central Mi",mri NEVADA

Hill Robinson, University of Nevada-Las Vegas NEWJER,SEY

Jdf Rubin, Rutgers University

Henry Ryder, Gloucester County Colkge

NEWYORK

Charles Calla.ban III, State University of N

York-Brockport MidJad Carew, Baruch College

Bill Gaffe, State Univer.ity of N York-Oswego Nancy Howe, Hudson Valley Community College Ghassan Karam, Pace Univ=ity

Anna MU!oatti, Columbia University Theodore MU"Ilo, St lohn's University, New York EIlUe Ozsoz, Fashion Institute ofTechnoiogy

Ed Strinbcrg N� York University NORTH CAROLINA Mimad Goode, Central Piedmont Community College Jonathan Phillips, North Carolina State University Robert Shoffner, Central Piedmont Connnunity College Eric Taylor, Central Piedmont Connnunity College Hui-Kuan Tseng, Univer.ity of North Carolina at Charlotte Rick Zuber, University of North Carolina at Charlotte lohn Whitehead,Appabchian State Uni"" ity

OHIO Jam., U'Angdo, Universityof Clncinnati Ttmothy Fuerst, Bowling GI� Suite University Uanid Horton, Clev.land State University Jay Mutter, Unmrsityof Akron Find more at www.downloadslide.com

Charles Reichheld, Cuyahoga Community College

Teresa Riley, Youngstown State University

Richard Stratton, University of Akron

Albert Sum ell, Youngstown State University

Yaqin Wang, Youngstown State University

Sourushe Zandvakili, University of Cincinnati

OKLAHOMA

Bill McLean, Oklahoma State University

Denny Myers, Oklahoma City Community College

Ed Price, Oklahoma State University

OREGON

Tim Duy, University of Oregon

B Starr McMullen, Oregon State University

Ted Scbeinman, Mount Hood Community College

PENNSYLVANIA

Cynthia Benzing, West Chester University

Steven Husted, University of Pittsburgh

Katherine McCann, Penn State

Nicole Sadowski, York College of Pennsylvania

Edward Scahill, University of Scranton

Ken Slaysman, York College of Pennsylvania

Sindy Abadie, Southwest Tennessee Community College

John Brasse!, Southwest Tennessee Community College

Micbael J Gootzeit, University of Memphis

Christopher Klein, Middle Tennessee State University

Leila Pratt, University of Tennessee at Chattanooga

TEXAS

Klaus Becker, Texas Tech University Alex Brown, Texas A&M University Steven Craig, University of Houston

Patrick Crowley, Texas A&M University-Corpus Christi Richard Croxdale, Austin Community College Harry Ellis, University of North Texas Jim Holcomb, University of Texas-El Paso Jim Lee, Texas A&M University-Corpus Christi Randy Methenitis, Ricbland College Carl Montano, Lamar University James Moreno, Blinn College Camille Nelson, Texas A & M University Micbael Nelson, Texas A&M University David Scbutte, Mountain View College David Torres, University of Texas-El Paso Ross van Wasscnhove, University of Houston Inske Zandvliet, Brookhaven College UTAH

Chris Fawson, Utah State University VIRGINIA

Janelle Davenport, Hampton University Bob Subrick, James Madison University Susanne Toney, Hampton University

WASHINGTON Andrew Ewing, University of Washington WEST VIRGINIA

Jacqueline Agesa, Marshall University Ricbard Agesa, Marshall University WYOMING

Robert Godby, University of Wyoming

Previous Ed ition Class Testers , Accu racy Reviewers , a n d Consu lta nts

Class Testers

We are grateful to both the instructors who class tested manu­

script of the first edition and their students, for providing

clear-cut recommendations on how to make chapters interest­

ing, relevant, and comprehensive:

Charles A Bennett, Gannon University

Anne E Bresnock, University of California, Los Angeles

and California State Polytecbnic University-Pomona

Linda Childs-Leatherbury, Lincoln University,

Pennsylvania

John Eastwood, Northern Arizona University

David Eaton, Murray State University

Paul Elgatian, St Ambrose University Patricia A Freeman, Jackson State University Robert Godby, University of Wyoming Frank Gunter, Lehigh University Ahmed Ispahani, University of LaVerne Brendan Kennelly, Lehigh University and National University of Ireland-Galway

Ernest Massie, Franklin University

Carol McDonough, University of Massacbusetts-Lowell

Sharon R)'lIn, UnM:rsity ofMi>lso�umbia

Hruce G Webb, Gordon College

Madelyn Young, Co"""rs� ColI�g�

Swan Zumas,Uhigh University

Accuracy Review Boards

Wt are gnteful to the following first edition and Hcond edi·

suppl!ments:

fatma Abdel·Raouf, Goldey· Beacom Coll!g!

Mohammad Bajwa, Northampton Community College

Hamid Butin, Shippensburg University

Don BumpU'l,Sam Houston State Uni�Bity

KdlyHuntlilinchard,l'urdu� University

Mark S Chester, Reading Area Community Coll!ge

KmnyChrirtiaruon,Binghamton Univusity

lshita Edwards, Omard College

Harold Elder, University of Alabama

HarryEllis,Univ." ityof North Texa

Can Erbil, Brandei! University

Marc Fusaro, Ea.o;tCarolina University

Robert Gillette, Univer�ityof Kentucky

William L Goffe, State University of New Vork-U!wego

Sarah GhOllh,Universityof Scranton

Maria Giuili, Diablo Valley College

Travis HaY"", Univasity ofTmne_e-Cbattaoooga

Carol Hogan, Univeristyof Michigan-Dearborn

Anisul M Warn, Univ=ity of Houston-Downtown

Aaron lackson, Bentley College

FaikA Koray; LouisianaState University

Nancy/ianakoplos, Colorado State University

Thomas C Kinnaman, Bucknell UDivenity

MaryK Knudson, University of Iowa

Stephan Kroll, California State Univusity-Sacrammto

Tony Lima, California State Univer.ity-EastBay

Randy Methenitis, Richland College

/am ,A Mo",no, Blinn College

Michael Potepan,San FrandscoState Univenity

M31yL Pranzo,Caiifor.rn.State Univer:sity-Fresno

Matthew Rafferty, Quinnipiac University

Jeff'Reynolds, North""" lllinois Unr ,rsity

BrianRo!>31io, Universityof California, Davis

lOIleph M Santos, South Dakotll Stat! UDivusity

Edward Stahill,Universityof Scranton

Mark V Siegler, California State University-Sacramento

Rachel Small, Univ." ity of Colorado-Boulder

StephenSmith,BakersfieldCoUege

RajeevSooreea, Pennsylvania State

University-Altoona

hb«ca Stein, University of Pennsylvania

Wendin! Thompson·Pawson, Univusity of Utah Rob<:rt Whaples,Wake Forest University

Consultant Boards

We received guidance during the f1nt and second !dition devdopment at everal critical junctures from a dedicated figure treatm!nt, and duign:

Kate Antonavics, University of California-San Diego Robert Beekman, Univ." ity of Tampa

Valerie Hencivenga, University of Texu-Awtin KdJyBlanchard,Purdut Unoosity

Sw.an Uadres, Southern Methodist Univemty Harry EI.Lis, Ir., University of North Thns Robert Gillett!, Universityof kntucky Robert Godby, University of Wyoming William L Goff!, Stat University of New York-Oswtgo /aneS HimariOll, Univer.ityof Texa.!-Arlington

Donn M JOhnllOD, Quinnipiac University

Mark Kandg, Cmtral Missouri State University Imny Minier, University of Kentucky

Nicholu Noble, Miami Unoo.ity

Michael Potepan, San Francisco State University Matthew Raff.rty, Quinnipiac University Hden Roberts, University of lliinois-Chicago Rob<:rt Rosenman, Washington State University Joseph M SantOll,South PakotaState University

Martin C Sp«hIer, indiana University-Purdue University Indianapolis

Rob<:rtWhaples, Wake Forest University Jonathan B Wight, Universityof Riclnnond Reviewers

The guidanct and recommendatioll.'l of the following instruc·

courHof tbreeyears

ALABAMA

Doris Bennett,/ack5onville State University

Harold'tV Elder, University of Alabama-Tu caloosa Wan<b HudllOn, Abbama Southern Community Colleg!

James L Swofford, University of Southern Alabama

MUWNA Doug Conway, Mesa Conununity College lohnEastwood, NorthernArizona Univer�ity Price fishback, University of Arizona

ARKANSAS

I.".ry Crawford, Arkansas State University CALIFORNIA

Renane Adler,SanDiego StateUni�rsity

Find more at www.downloadslide.com

Becca Arnold, Mesa College

Robert Bise, Orange Coast Community College

Victor Brajer, California State University-Fullerton

Anne E Bresnock, University of California, Los Angeles

and California State Polytechnic University-Pomona

David Brownstone, University of California, Irvine

Maureen Burton, California State Polytechnic

University-Pomona

Anoshua Chaudhuri, San Francisco State University

James G Devine, Loyola Marymount University

Jose Esteban, Palomar College

Roger Frantz, San Diego State University

Craig Gallet, California State University-Sacramento

Andrew Gill, California State University-Fullerton

Maria Giuili, Diablo Valley College

Lisa Grobar, California State University-Long Beach

Steve Hamilton, California State University-Fullerton

Dewey Heinsma, Mt San Jacinto Community College

Jessica Howell, California State University-Sacramento

Greg Hunter, California State University-Pomona

Ahmed Ispahani, University of LaVerne

George A Jouganatos, California State

University-Sacramcnto

Jonathan Kaplan, California State University-Sacramento

Philip King, San Francisco State University

Lori Kletzer, University of California, Santa Cruz

Stephan Kroll, California State University-Sacramento

David Lang, California State University-Sacramento

Carsten Lange, California State Polytechnic

University-Pomona

Don Leet, California State University-Fresno

Rose LeMont, Modesto Junior College

Solina Lindahl, California Polytechnic State

University-San Luis Obispo

Kristen Monaco, California State

University-Long Beach

W Douglas Morgan, University of California, Santa

Barbara

Joseph M Pogodzinksi, San Jose State University

Michael J Potepan, San Francisco State University

Mary L Pranzo, California State University-Fresno

Ratha Ramoo, Diablo Valley College

Scott J Sambucci, California State

University-East Bay

Ariane Schauer, Marymount College

Frederica Shockley, California State University-Chico

Mark Siegler, California State University-Sacramento

Lisa Simon, California Polytechnic State

University-San Louis Obispo

Stephen Smith, Bakersfield College

Rodney B Swanson, University of California, Los Angeles

Lea Templer, College of the Canyons

Kristin A Van Gaasbeck, California State Sacramento

University-Michael Visser, Sonoma State University Kevin Young, Diablo Valley College Anthony Zambelli, Cuyamaca College COWRADO

Rhonda Corman, University of Northern Colorado Dale DeBoer, University of Colorado-

Colorado Springs

Murat Iyigun, University of Colorado at Boulder Nancy Jianakoplos, Colorado State University Jay Kaplan, University of Colorado-Boulder

William G Mertens, University of Colorado-Boulder Rachael Small, University of Colorado-Boulder Stephen Weiler, Colorado State University CONNECTICUT

Christopher P Ball, Quinnipiac University Donn M Johnson, Quinnipiac University

Judith Mills, Southern Connecticut State University Matthew Rafferty, Quinnipiac University

DELAWARE Fatma Abdel-Raouf, Goldey-Beacom College Ali Ataiifar, Delaware County Community College Andrew T Hill, University of Delaware FWRIDA

Herman Baine, Broward Community College Robert L Beekman, University of Tampa Eric P Chiang, Florida Atlantic University Martine Duchatelet, Barry University Hadley Hartman, Santa Fe Community College Richard Hawkins, University of West Florida Brad Kamp, University of South Florida Brian Kench, University of Tampa Barbara A Moore, University of Central Florida Augustine Nelson, University of Miami

Jamie Ortiz, Florida Atlantic University

Deborah Paige, Santa Fe Community College Robert Pennington, University of Central Florida Bob Potter, University of Central Florida

Jerry Schwartz, Broward Community College-North William Stronge, Florida Atlantic University

Nora Underwood, University of Central Florida Zhiguang Wang, Florida International University Joan Wiggenhorn, Barry University

GEORGIA Constantin Ogloblin, Georgia Southern University

Dr Greg Okoro, Georgia Perimeter College-Clarkston IDAHO

Don Holley, Boise State University ILLINOIS

Teshome Abebe, Eastern Illinois University

Ali Akarca, University of Illinois-Chicago